Quite a Heavy Week Ahead...

The Dow rose an amazing 9.01% last week, which is the biggest single week rally in 2009 so far. However, before anyone gets too excited about it and jump in with everything you've got, just look back at the 2 above 9% weekly rise in October and December last year and you will see that after such an explosive relief rally, the way ahead is usually... DOWN. Indeed, this is further reinforced by the fact that all 3 major indices are right at the doorstep of their 30MA short term resistance level, which is the most powerful one in the way of stopping relief rallies. This was also how the October and December relief rally ended. Yes, history tends to repeat itself until something significant changes and that is the primary assumption of technical analysis. On the fundamental front, this is going to be another heavy week with the Empire State Index on Monday, FOMC Announcement on Wednesday, Leading Indicators on Thursday and Bernanke Speech on Friday (see economic calendar). Yes, if the Empire State Index and Leading Indicators still point to gloom going forward (which they probably will), they could be the catalyst to end this relief rally, coinciding with the technical indications. So, I am not going to be too optimistic until I see some significant changes.